Continued Disruption, Regulatory Uncertainty, and Data Privacy
Yesterday, the legal tech world convened at the Hilton Midtown Manhattan for the first day of the 2017 LegalWeek conference. With over 10,000 registered attendees, more than 200 speakers, and over 300 exhibits, the “largest and longest running trade show for legal technology” brought together legal professionals excited to explore the challenges the industry has faced, or will face, this coming year. As the CEO of ALM addressed prior to the first keynote, the name was changed this year from the “LegalTech Conference” to justify the scope and growth of the conference. On Day One, there emerged three common themes of the conference:
(1) continued disruptions in the legal industry
(2) both domestic and global regulatory uncertainty
(3) and data privacy and security.
During the first keynote, ALM Intelligence officials Nicholas Brunch and Daniella Isaacson spoke to the crowd about the ever-changing legal landscape and the addition of new-players year-after-year. Explaining who’s responsible for the new competition, the pair cited staffing firms, accounting firms (primarily overseas competition) and innovative companies creating new technology. Nicholas and Daniella also shared statistics, some of which were uncomforting to firm-lawyers in the crowd. Law firms have typically risen and fallen together when it comes to revenue, but that is no longer the case. There is now a divergence amongst law firm success– about a third are doing well, a third stable and the other third “not doing so well.”
So what’s the story in 2017? The ALM representatives offered two reasons for the changes above. New vendors continue to cause law firms headaches in the form of heightened competition (often utilizing technology) and growth for the industry as a whole is slowing.
In the form of technological competition, Andrew McAfee was brought on the stage to further explain the disruption. Andrew used the recent news that the best Go player in the world is now a computer; Google allowed a computer (via DeepMind) to control its data center’s heating/cooling energy efficiency and retained huge cost savings; and Microsoft has created a speech recognition software that is on par with human capability. The undertone of the conversation was that the legal industry (specifically advocacy and advice) may not be as safe from tech as we once thought. McAfee ended with sentiment from Hemingway on how people go broke, “gradually, then suddenly.”
At the final keynote, a panel moderated by Sunny Hostin (ABC News) a final question was posed to the panelists: How are you handling this disruption? Roger Meltzer (DLA Piper), the panel’s law firm representative, stated that law firms used to believe the disruption was just another pendulum shift, but now that law firms “got the joke” they’ve begun to run the firms like businesses. Mark Ohringer (Jones Lang LaSalle) jokingly reminded the audience of another recent legal transformation: when he was in law school he had to use “books, libraries, and huge Lexis machines … now [the library] is probably filled with fooseball tables.”
Regulatory worry was also on the top of minds of many attendees yesterday. In the opening presentation, ALM representatives recapped some uncertainties of the current regulatory environment, specifically the recent United States presidential election, Brexit, and other global events that are throwing businesses and legal departments for a loop tracking regulators and legislation that may require new compliance awareness.
Particular to the United States, Dr. Erwin Chemerinsky (UC Irvine Law School) put into context how legal ideology in the United States may shift dramatically dependent on how many Supreme Court Justices will be appointed by the newly elected President Trump during his term.
With regard to legal technology, Dr. Chemerinsky argued that the current “Supreme Court justices are struggling with technology … [and] bring[ing] the Constitution into the 21st Century,” citing no decisions on e-Discovery, and very little involving the internet. He believes changes may be coming soon.
At the final keynote, a concerned Mark Ohringer (Jones Lange LaSalle) talked about the inability to predict what is going to happen. His department tries to solve for regulatory uncertainty by having resources ready and in place for whatever comes through his door next, and “having a lot of people on your rolodex.”
It seemed that in every presentation, at some point, data privacy and security was addressed if not alluded to.
In an “Advice from Counsel” panel discussion on “Data and Risk-Intensive Investigations,” the main focus was on the EU’s newly enacted General Data Protection Regulation (GDPR). Jessica Ross (Deutsche Bank) warned the crowd that companies in non-compliance will have to pay hefty fines … “and we know it takes more than a few months to prepare.” With the regulation looming (effective May of 2018), the panel discussed the necessity of finding 2017 budget for preparations as legal services providers may raise fees as the deadline inches closer to May 2018.
Data security and breach was also a concern echoed throughout Day One. The Democratic National Committee’s recent data breach was brought up on several occasions and during the final keynote of the day, Ricardo Anzaldua (MetLife) shocked the crowd with the statistic of encountering approximately 12 billion attempts per year to infiltrate Metlife data. What’s the summary regarding data privacy? Counsel and legal departments as a whole need to be risk managers and have proactive processes in place regarding breach and security.